Over 200 attendees heard Player detail the Top 10 Budgeting Mistakes finance professionals can avoid with the right strategies.Adaptive’s Application Specialist Diane Drake joined Player and explained how cloud-based business planning software can help companies to avoid these pitfalls.

Steve’s Take: “There are far better ways to plan and control the organization than the annual budget process.”

2.Driving to Yearend Budget Targets

Steve’s Take: “This is where, fundamentally, your budget lies to you…everybody is driving toward the target, even though the target is based on assumptions that have long since been out of date.”

3.Tying Incentive Compensation to Reaching Budgets

Steve’s Take: “You wind up in a game of negotiation where budgeting is an exercise in liars’ poker. Nobody is transparent. They’re just trying to negotiate the best position. It destroys the ethical foundation of the organization.”

4.Using Budgets to Control Costs

Steve’s Take: “When you use budgets to create a ceiling for costs, you also create a floor for costs right up there at the same place. That really small room is a prescription for overspending.

5.Building Budgets on a Foundation of Assumptions That Are Beyond Organizational Control

Steve’s Take: “Pick your key commodities and tell me what you think the prices are going to be in the next 6-12 months…we don’t know which way they’re going, so we’ve got to work on a different way of building our plan. Not one that is reliant on a bunch of assumptions that are totally outside of our control.”

Steve’s Take: “When you think about capital budgeting, what you really need to have is an investment bank that is open all the time. If you were running a bank, would you only open it 2-4 months out of the year? I would suspect not.”

7.Going Through Multiple Bottom Up/Top Down Budgeting Iterations

Steve’s Take: “This is essentially a game of extended negotiation. It has all kinds of different permutations, but the biggest one is that it’s just waste.”

8.Adding More Detail to Improve Budget Accuracy.

Steve’s Take: “The more drivers and items you have to look in, the more time you spend gathering information, and the less time you have to do any real analysis.”

9.Relying on Excel Spreadsheets for Planning

Steve’s Take: “Don’t get me wrong. Spreadsheets are great personal productivity tools. But the minute you start sharing that tool across two desktops, problems begin to occur.”

10.Starting Earlier to Improve the Budget Process

Steve’s take:“Starting the process earlier doesn’t make it any better. It just means you spend more time and resources on creating it.”